Mutual Fund Review – September, 2021 – ICICI Direct

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Industry Synopsis

– The mutual fund industry AUM continue their rising trajectory and rose 3.6% in August 2021 to Rs. 36.6 lakh crore compared to Rs. 35.3 lakh crore in July 2021

– Inflows into equity funds continued with inflows during August at Rs. 8666 crore against Rs. 22500 crore in July. Inflows in the last two months were dominated by NFOs. In July, NFOs collected fresh money of Rs. 13700 crore while in August inflows through NFOs were Rs. 6863 crore. Excluding NFO flows, inflows declined sharply during August with inflows at Rs. 1800 crore compared to Rs. 8900 crore in July 2021

– In debt funds, outflows were seen in lower maturity funds like liquid, overnight and low duration funds while all other category of funds witness inflows. Floating rate funds have been witnessing higher inflows since last few months as investors prefer to avoid any interest rate risk in higher duration funds

– Balanced advantage funds saw significantly higher inflows at Rs. 16500 crore on the back of NFO inflow dominated by SBI Balanced Advantage Fund NFO

Performance Highlights

– Small cap funds staged a comeback after a brief period of underperformance. Small cap funds have been consistent outperformers since the market recovery post Covid-19 pandemic induced fall last year. Midcap also followed small cap funds and have outperformed other categories

– IT funds have been consistent outperformers in the last two to three years as the growth outlook improved for the sector in the post Covid world resulting in valuation re-rating of most stocks. The sectors or segments like infrastructure, PSUs which lagged behind in the early part of the rally, have started to gain traction indicating the healthy trend of sector rotation

– Global funds have underperformed significantly in the last few months

– Medium term funds and credit risk funds are outperforming as a stable yield environment led to higher return in these higher YTM funds

– Across all ETFs, IT ETF has significantly outperformed with the last six months return at 38% against Nifty 50 ETF return of 20%

For details, click on the link below: Link to the report